SMALL BUILDERS Introduction Video

Keeping it Real – How to Prove Weather Delays

Often small builders and commercial contractors like yourself encounter project delays due to inclement weather.  And often, you would think “Hey, they know it rained!”

However, once you submit an extension of time claim, your principal or head contractor denies it outright.  Why? You didn’t present proof of the weather delay.

Tips of the Trade

In my years of experience in building and construction, whether the project uses an Australian Standard or other form of contract, one thing is common – a small builder or commercial contractor like you has to send a notice of delay with details of the cause of delay and an extension of time claim.

So what are the best practice tips in preparing your notice of delay?

1.       Keep a site diary. – Who was working on site that day? What work was supposed to be completed? Which trades were affected by the weather delay?

2.       Take pictures and include them in your diary. – Yes, you can support your delay notice with data from the Bureau of Meteorology.  But what if the site you are working at does not have a weather station in that suburb or city?  Taking pictures of the site, including the effect of the rain on working conditions, is an inexpensive way to gather proof of the weather delay.

3.       Inspect the project site. – Take a walk around and gather information regarding the effect of the delay, including on the work health and safety of the persons who will perform work.  Invite a representative of the principal or the head contractor and record the results of your inspection.

4.       Do not add to the delay! – Submit your notice of delay as soon as possible to avoid the contract time bars.  All your supporting evidence will be useless if your notice of delay or extension of time claim is submitted too late!

Building Software for your Notice Needs

You have to remember that to claim for an extension of time is your right as a small builder or commercial contractor to ask for a reasonable extension to your construction program due to delays which are beyond your control.  To fail to claim for an extension of time exposes you to liquidated damages and other delay damages.

Does it all seem too complicated for a simple notice?  You need to take advantage of technology now available for small builders and commercial contractors.  The Small Builders Building Software is a perfect example of this technology.  The Small Builders Building Software allows you to:

• prepare a notice of delay wherever you are, as long as you have an internet connection
• attach photos and other documents to your notice of delay
• record minutes of meetings -  record results of your site inspection
• send your notice of delay to your principal or head contractor by email

Small Builders Building Software

Small Builders is incorporated in New South Wales, Australia. Its head office is at the Master Builders Association NSW Building at 52 Parramatta Road, Forest Lodge, NSW, 2037.

The Small Builders software was developed by the Company’s Founder and CEO, John Dela Cruz. John is a specialist building and construction lawyer and a member of the Master BuildersAssociation NSW.

Inclement Weather Management System

Every builder and contractor needs an effective and robust inclement weather management system. Whether it is summer, winter, spring or autumn, the Australian weather can get bad. When quoting a job, I have not come across any way of predicting how the weather will impact the construction program, the sequence of work or the increase in costs which stems from inclement weather delay.

Inclement Weather Defined – Construction Contracts

In building and construction contracts, the term inclement weather is often defined. Inclement weather is any weather that may impede or prevent works from being conducted in accordance with the contract. This definition is broad for many reasons.

In this definition, I use the term impede loosely to include interruptions to or slowing down of work. Prevent means just that, to stop. Both apply to a period of time and both apply to works being conducted in accordance with the contract.

3 Limbs to Define Inclement Weather

For construction contracts, the definition of inclement weather can be broken down into 3 limbs.

1.       There must be a weather event.

2.       That event must either interrupt or impede works.

3.       The works being interrupted or impeded must be the subject of a construction contract.

The Small Builders Inclement Weather Management System

Small Builders and commercial contractors should have an effective inclement weather management system in place to help them run a sustainable business. There are many obvious reasons for having an inclement weather management system. These reasons include to deliver on your gross margin estimate (noting overhead costs continue to accrue) and to prevent exposure to delay damages.

“Small Builders and commercial contractors should have an effective inclement weather management system in place to help them run a sustainable business.”

Contracts

You must ensure you draft your head contracts, subcontracts, and supply contracts to manage the inclement weather risks. You need to ensure you understand the rights the contract provides you and the other contracting parties. You need to understand how to comply with your contractual obligations.

The Small Builders Inclement Weather Management System can help you manage inclement weather risks.

Construction Program

Often your contract requires updating the construction program after an inclement weather event. Even if updating your construction program is not contractually required, it is good business practice to communicate effectively with all project stakeholders. Part of good communication is to update the construction program and any sequence of work regularly to ensure these documents are up-to-date.

Small Builders software has a construction program that can help small builders and contractors make and maintain updated construction programs.

Project Administration

It is absolutely critical to construction work that the builder, all contractors, all suppliers and all workers are communicating. Verbal communication has been the industry norm for very many years. However, in recent years it has become critical to also formally send notices to ensure proper documentation. 

The Small Builders software can help you serve compliant notices to manage weather risks.

Variations

Depending on what your contract says, you may be entitled to a variation to your original contract sum. The basis for the variation includes:

1.       out of sequence work;

2.       increased costs like industry change and overhead costs accrued; and

3.       damage to works.

An effective inclement weather management system can help you manage your risks and costs and claim for variation works.

Out of Sequence Work

Out of sequence work is important to consider in carrying out the project after a weather event. Some trades, for example, may be able to continue with their program but others may not be able to continue for some days after the weather event passes.

It is important that all interested parties to the project communicate with each other to ensure they can best manage any out of sequence work.

Efficiency

It is important that your inclement weather management system is easy to use and can be carried out quickly. If the system is either difficult to use or too time consuming, you may have less stakeholders complying with their obligations. Also, a lack of compliance and a delayed project has often caused or contributed to disputes.

Work Health and Safety

You may be required to update the project safety management plan if the weather event changed the nature or condition of the project site. Your site work health and safety officer and team should consult with all stakeholders after a significant inclement weather event to determine if the WHS plan or WHS control measures need to be updated.

Quotes

A construction contract is important.  However, the basis for the parties contracting often arises from the quote. A good inclement weather system addresses possible weather risk starting from the quote.

Small Builders Inclement Weather Management System

Small Builders building software has an excellent inclement weather management system in the standard package. One inclement weather event during your project will make having the Small Builders software an excellent investment.

Small Builders can help if you want to find out more about inclement weather or inclement weather systems.

The Cost of Project Commencement Delay

The old adage of Time is Money rings out loud when I think of the Cost of Project Commencement Delay.

In the past 3 months, I’ve worked with many clients who have experienced delay with their project commencing. I will talk about 3 of them to highlight where things went wrong and what a builder or commercial contractor could do to manage this risk.

3 Projects that suffered from a Delay with Project Commencement

Richie the Cost Plus Builder – Up to $1M Contract

The builder was approached by a long term client to refurbish another one of his residences. The client had obtained all the compliance documents for the refurbishment. The parties agreed that the Builder should work on a cost-plus contract because of the premises seemed to be in a flood zone area.

After executing the contract, the builder engaged an engineer to determine the stability of the ground. Unfortunately, the engineer’s recommendation was that significant piers would need to installed. The parties agree it would be more cost effective and result in a better build if the house was knocked down and rebuilt.

This is where the Cost of Project Commencement Delay comes into play. The compliance documents approved by Council were now inconsistent with the new work to be performed. The Builder was expecting to commence the work in May, it is now September.

On reliance on this important long term client’s work commencing and the significant work required for this custom project, the builder cleared out his schedule and refused work from April onward. The builder accepted a few small odd jobs to keep him going but nothing really substantial. It took the Builder until August to approach me and describe the problems he is experiencing from the delay with this project commencing. I have collated his problems described below.

Trevor the Lump Sum Builder - $1M+ Contract

The Client consisted of owner-occupiers of a block of units in Bondi. The Client engaged an architect to prepare all drawings and specifications and more importantly to project manage the job. The Client engaged a building and construction lawyer to negotiate the contract terms and conditions.

The project is in a high profile location - Bondi Beach. The Client(s) are prominent long term residence of the community. The project is the first time build for the builder – a knock down re-build of apartment block. The builder viewed the project as a significant opportunity to demonstrate his building skills with a view to extending his business into apartment style building as well as his current portfolio of residential refurbishments and builds. Most importantly, the value of the contract was in the millions of dollars so the builder wanted to ensure he devoted his attention to it.

The Builder, as you would expect, blocked out his sales and construction pipeline.

Everything seemed to be on track from negotiating the contract up to the time of contract execution. Then out of left field one of the unit owners notified everyone that their finance has not yet been approved. The project has been delayed for more than 4 months now.

John the Commercial Contractor - $1M+ Contract

This commercial contractor specialises in high-end commercial windows and doors. The project was in a prominent CBD location surrounded by Global award winning buildings. The project was to design and construct curtain wall around the rooftop of a heritage listed building as-well-as an extrinsic curtain wall for the linkway adjoining the heritage building and the new building. Put simply, there weren’t many contractors who could deliver on this project.

Given the significant risks with the project, the contractor cleared his sales and project pipeline so that he good focus his specialised design and engineering skills on this project. In close collaboration with tier-1 engineers, the builders architect and other specialist contractors, the contractor worked on the design of the works to draft a building to stand-out from the rest.

You may have guessed that the builder was delayed with having the contractor commence his work. The reasons for the delay left people associated with the project wondering whether the project was cursed. First, the suppliers for the materials were few and far between given the specialist quality of the material required. The builder, despite many engineering reports, encountered numerous latent conditions during prior trade construction particularly when coming out of the ground.  Then the Gods got angry and the project experienced some of the worst rainy weather in many many years.

Unfortunately for the contractor, his work requires significant capital investment into materials. Being the diligent contractor that he is, he purchased all the material he required, fabricated this material, and had everything to go ready, as demanded by his dictating commercial builder under the construction contract and construction program. The project was delayed by 5 months.

Summary of Reasons for Project Commencement Delay

1.       Change in scope of work

2.       Incomplete or incorrect scope of work

3.       External service provider design and drawings

4.       Council approval

5.       Lack of or change to financial circumstance of client

6.       Weather

7.       Latent condition identified in prior sequence of work

The Costs of the Project Delay in Commencing

1.       No revenue generated from the expected project – the flow on effects of that are obviously significant.

2.       Dead sales pipeline – he blocked out the construction period because it was a cost-plus project and now this construction period is being extended every day by the delay with the construction commencement.

3.       Increased cost with materials. Right now, Sydney is experiencing significant boom in construction and it feels like suppliers are increasing their prices by the day.

4.       Significant capital being invested and money being locked up

5.       Overhead costs being incurred without any work – full-time wages, insurances, rent etc

6.       Idle time for workers and company-wide – leading to decreased morale and wasted skill-set

Pondering on these scenarios, I can’t help but wonder how many projects are delayed and the flow on affects of these delays. These delays were not expected by either of these builders or the commercial contractor but I know that the cost of the project commencement delay has left the small business out of pocket and hurt their successful businesses. I will blog about at a later date what are some things a commercial contractor can do to manage the risk of project delay and managing the associated costs with these.

John Dela Cruz

Small Builders – Building Software

Founder and CEO

About the Author

  

 

John Dela Cruz is a specialist building and construction lawyer who works with small builders and commercial contractors. John is passionate about helping small builders and commercial contractors build sustainable businesses. As well as being a lawyer, John is the Founder and CEO of Small Builders, Building Software. John holds numerous qualifications and memberships including being a member of the Master Builders Association of NSW.